Hampton Roads, VA - 02/09/2010
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Rejected suitor asks cities to help get SPSA info

Posted to: News SPSA

The request
Representatives of New York-based ReEnergy Holdings LLC asked Portsmouth city leaders to send a letter to SPSA asking the agency to allow ReEnergy to survey its operations and company information.

The reason
A ReEnergy official said the request is intended to help his company estimate what it would charge as a tipping fee. SPSA, which rejected a bid from ReEnergy this month, said it intends to double its fee.


PORTSMOUTH

A New York company that wants to buy SPSA and privatize trash and recycling in South Hampton Roads is asking member communities for help accessing the agency's operations.

During a City Council retreat Saturday, representatives of ReEnergy Holdings LLC asked Portsmouth city leaders to send a letter to the Southeastern Public Service Authority asking the agency to let ReEnergy survey its operations, staff, and legal and financial information.

ReEnergy's executive officer, Larry Richardson, told Portsmouth council members and city staff that ReEnergy needs the information from SPSA to come up with a firm idea of what the company would charge as a tipping fee to dispose of a ton of trash.

He said his company's bid had taken on "new urgency" since SPSA announced earlier this month that it plans to more than double its disposal fees, to $245 per ton.

That rate would be the highest tipping fee in the nation and would cost member communities millions more per year.

Calls to a SPSA spokesman seeking comment were not returned Saturday.

This month, SPSA rejected ReEnergy's $205 million bid without a public hearing. The company wanted to buy all of SPSA's assets, including a power plant in Portsmouth and the regional landfill in Suffolk, and retire the agency's $240 million in debts.

"We just got pushed back - 'Go away. We want to keep SPSA the way it is,' " said Vincent Mastracco Jr., an attorney with the Norfolk law firm Kaufman & Canoles, which is representing ReEnergy.

But ReEnergy representatives and affiliates have continued conversations with city leaders in the communities SPSA serves: Virginia Beach, Norfolk, Portsmouth, Chesapeake, Suffolk, Franklin, Southampton County and Isle of Wight County. They now plan to appear on meeting agendas for those communities over the next few weeks, asking each to send a similar letter to SPSA.

Portsmouth City Attorney Tim Oksman said he would circulate a resolution on SPSA before Tuesday's council meeting. Chesapeake has already passed a resolution opposing the tipping-fee increase.

But SPSA's executive director has said SPSA would not be able to operate without the rate hike, which is scheduled to go into effect next month after a public hearing Wednesday.

As ReEnergy seeks support from local governments, SPSA has continued to prioritize selling portions of the agency. The agency has been discussing the sale of its Portsmouth waste-to-energy plant with Covanta Energy and Wheelabrator Technologies.

The authority sent out a news release Friday saying SPSA's leadership is looking to negotiate a purchase contract with one of the two companies over the next several months.

"This could have significant impact on our desire to reduce the tipping fee we charge our member communities," SPSA board Chairman Don Williams said in the release. "As we continue to reorganize our operation, we will continue to look to divest portions of our operation that would better serve our member communities through contracts with private firms."

Jen McCaffery, (757) 446-2627, jen.mccaffery@pilotonline.com



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Let's take another look at who ReEnergy is

ReEnergy is being backed financially by Waste Industries, a trash hauling company based out of North Carolina. No experience in landfilling or waste to energy power plants. The principals of Reenergy are leftover management personnel from the Covanta buyout of American Ref-Fuels a few years back. If one of the industry giants didn't keep them onboard it speaks volumes to their abilities in waste to energy. One of the biggest complaints the citizenry and local governments have about the SPSA board and its operation of the areas solid waste disposal system is that they lack the right experience. Wouldn't selling to ReEnergy be doing the same thing?

Ah yes, the sound of an

Ah yes, the sound of an informed citizen.

Privatization would result

Privatization would result in accountability. SPSA can't have that - most of them would lose their jobs. Much better to hang on to cush government funding, which requires no accountability and accepts substandard performance.

REENERGY Should have submitted their proposal with the rest.

The proposal to purchase SPSA assets was done under the PPEA act of VA that has certain guidelines that must be followed. The bidders to purchase the facilities in Portsmouth followed those guidelines and RENERGY did not. They are now trying to circumvent the process through backdoor deals. They visited the facilities in Portsmouth prior to the deadline why didn't they submit a proposal then? The proposed fees will be paid for a longer period of time if the member communities force the board to re-open the bidding to all competitors again. REENRGY had their chance and missed it for wahtever reason. Why not ask those questions instead of once again ridiculing the board for attempting to rid itself of debt and privatize part of the system? Selling everything to one private company only replaces a public monoply with a private one.

spsa passes the buck

wahhhhhhhhhhhhh!

A kernal of Truth

Yes, the board failed to take actions to minimize this crisis. No denial there. But in fact, this emergency is caused by two issues determined at the creation of SPSA, and one determined by the Supreme Court, all out of the control of past and current boards. I identified these issues below, but to reiterate, the first is free disposal for Suffolk, the second is the cap on the rate for the largest municipal user, and the third is the decision by the Supreme Court that cities cannot set rates for the commercial sector. As a result, the average tip fee today of $65/ton is not spread out equally; Suffolk pays nothing, the Beach's rate is capped today at $53/ton, and the commercial sector and the Navy pay whatever rate can be negotiated, currently about $35/ton. Ironically, the proposal from ReEnergy acknowledges this disparity, and it is conditioned on the members agreeing to new contracts and rates. Clearly, the unintended consequences of 25 year old, legally binding contracts have created this crisis.

SPSA is a mess.

The fact is Mike Barrett is part of SPSA's problem and SPSA is a mess. Time to clean house and move on.

Mr.Barrett

Your board created the problems we are faced with and have created the bad publicity that you complain about. 'Highest tipping fees in the nation,'? If that is wrong, point out who does have higher fees. You folks are slow to fix the problems you have created and it is very obvious that you don't have the experience that is really needed to manage waste disposal for this area any more. I've been to meetings of your people - and since I wasn't any sort of a high roller, I was treated very rudely. The bad reputation SPSA has generated has been earned - by its own doings and its management and how it has treated the people of Hampton Roads. It is going to take a lot to repair that reputation and win back the trust of the people, IF that is at all possible at this point.

Horrendous Management

SPSA has failed due to the lack of vision an consequences elected officials did not plan for, regarding Suffolk and Virginia Beach growth, in comparison to rate caps and no fees at all. If SPSA's current mangement structure remains at the helm, you will continue to see poor business practices and high priced upper management that can be drastically reduced in order to provide better financial efficiency.

If you have bad apples in the bunch that have failed in their leadership roles within a company, you do not let them remain and continue failed policies that have brought this company to its present state. You recruit new, proven leadership, that has proven success within that industry, and you rid the company of people who have led this company to financial ruin. SPSA's house must be cleaned.

Particpant in Obfuscation

What a shame that the Pilot has decided to become an advocate of one proposal to take over SPSA, and has adopted language designed to confuse the public rather than to clarify. In this case, ReEnergy was not rejected; the SPSA board does not have the authority to renegotiate the contracts that each city signed with SPSA. That power resides with each city, not with the SPSA board. Second, the system tip fee is in the neighborhood of $65/ton; not anywhere near the "highest tip fee in the nation." As we all know, the method of cost allocation created by the framers, which provided free disposal to Suffolk and a capped rate on the largest municipal user, when added to the Supreme Court decision that provided a market rate to the commercial sector, all have conspired to make the cost allocation system, not the disposal system itself, antiquated and out of date. The Pilot has had an oportunity to elucidate and inform; instead, it has become a big part of the problem.

ReEnergy Proposal

I have read the ReEnergy proposal to SPSA, and although I was delighted to see plans for recycling, one paragraph in response to the question "What about out-of-state waste?" seriously worried me: "...ReEnergy does not see any need at the present time to attract out-of-state waste into the system." To me the words "at the present time" are a huge red flag. If the facility is owned and operated by a private company, the City of Portsmouth can no longer refuse to accept out-of-state waste under current interpretation of the U.S. Constitution's Interstate Commerce Clause. Unless there is an air-tight way of imposing a restriction on out-of-state waste as part of a sales agreement between SPSA and ReEnergy, Portsmouth will be in exactly the position it would have been had the Covanta proposal been accepted a couple of years ago. No-o-o-o!

SPSA

You mean Mike Barrett hasn't solved the SPSA situation yet??? What is he waiting on?

With a character like Don

With a character like Don Williams as chairman how could one poosibly think that SPSA is operated in other than the most efficient manner? A true example of high caliber leadership. Just ask Norfolk taxpayers!

About time

It's about time someone got smart and started going around the SPSA's so-called leadership. The only way this mess is really going to get straightened out is if the local governments bring in people that actually know something about handling trash on a massive scale like what Hampton Roads has. The board of directors for SPSA seem to be professionals at one thing: dodging critical issues and questions until they are forced to answer up by the heads of the communities they are supposed to be serving.

Someone Needs to Look At The Proposal

SPSA directors may not have a completely unbiased view on this proposal. Why not let the cities paying the bills develop a committee of "qualified" business and industry folks to study it and make a recommendation. No politics, or self preservation motivations, no self serving agendas - just make a judgement to pursue or put to rest.

Companies badly managed need to be restructured

Doubling price to dump trash? With the price of fuel at record lows its impossible to make a reasonable excuse. If anything the government NEEDS to cap executive pay in relation the lowest paid workers. Sure this a capitalist country.. but that's exactly what got us in the financial crisis we are in right now.

SPSA

The SPSA must have a lot to hide to keep playing these games like this. I say screw being nice - force them into bankruptcy and expose whatever illegal activities they may have going on...

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